Things to Know

Currencies have been on a roller coaster ride with record breaking highs and lows. The world of foreign exchange is dominating news headlines, but what does it mean, and more importantly, what do you need to know before you get on board? First of all, it is important to understand that trading in the Foreign Exchange market involves a high degree of risk and traders should know to stop losses.

Forex in nutshell

Forex in nutshell

Forex, also known as foreign exchange or FX, is a global market where the world’s currencies are traded. Essentially, it’s the exchange of one currency to another. Forex is the largest, most liquid financial market in the world with turnover in excess of $5 trillion every single day.

Points to remember:

» Many firms don’t charge commissions – you pay only the bid/ask spreads.

» There is 24 hour trading – you dictate when to trade and how to trade.

» You can trade on leverage, but this can magnify potential gains and losses.

» You can focus on picking from a few currencies rather than from 5000 stocks.

» Forex is accessible – you don’t need a lot of money to get started.

» Currency values are constantly changing, with a number of factors affecting how much eachone is worth.

» Forex Traders will buy a currency that they think will rise in price and sell a currency they feel will depreciate in value.

For example, if they have Euros but feel the price is weakening, they might exchange these for GBP, which they have forecasted will rise in value. Then, when they go to buy Euros back, they will be able to buy more than they started with – meaning they’ve made a profit. Although the fluctuations will often be quite small, these can become incredibly significant when large values are exchanged.

Who can trade in Forex?

Who can trade in Forex?

Forex traders and investors are a diverse group, coming from a broad spectrum of backgrounds, ages and disciplines. From the individual who is brand-new to the market, to the most seasoned currency trader, engaging in forex is one of the most common methods of participating in the world’s financial markets. Considering the low entry barriers, seemingly all one needs to begin trading forex is a computer, internet connection and brokerage account. While each person enters the marketplace with a unique set of goals and objectives, forex traders are typically divided into two major categories: institutional and retail.

Institutional Forex Participants

The largest players in the forex market are institutions, or institutional traders, and investors. Institutional money accounts for the majority of forex trading, estimated to be approximately 94.5% of the market volume.

Retail Forex Participants

The second classification of forex market participants is known as “retail.” In contrast to the institutional traders, retail traders and investors trade for their own private account, risking their own capital.

Pick your broker wisely - An efficient broker should enable you with

» Supply their clients with a forex trading platform

» Provide real-time market quotes

» Execute buy and sell orders

» Allow their clients to trade on margin

» Carry out market analysis and provide recommendations

» Ensure their clients’ security and anonymity

How to make profit from Forex?

How to make profit from Forex?

One of the most difficult things for forex beginners to understand is how you make profits trading currencies. At the same time, since we don’t charge commissions, many people don’t understand how we make money either.

Here are the answers!

How do you make money?

Let’s take an example based on the graph below:

» You open an Classic Account with €2,000

» You think the Euro will go down against the US dollar

» You decide to sell 200,000 Euros once the bid price reaches 1.2850 US dollars

» Because you are on 1:100 margin, this costs €2,000 – we provide the other €198.000

» There is no margin left in your account at this point

» The Euros you sold are worth $257.000 US dollars

» You decide to buy Euros once they go down to an ask price of 1.2750 US dollars

» The Euro ask price reaches 1.2750 US dollars and you buy

» This costs $255,000 US dollars

» You have now sold 200.000 Euros for $257.000 and bought them for $255,000

» You decide to buy 1500 Euros when the Euro ask price goes down to $1.2750

» It does and the cost is $1912.50

» Because you have 1:100 margin this only costs you $19.12 – we provide the rest

» The Euro then goes up to 1.2850 US dollars

» You sell your 1500 Euros for $1927.50

» Your profit is $15.00 – a 75% return on your $20 investment!

How do we make money?

You’ve made money trading Euros and dollars. We don’t charge any commission, so how do we make money?

Notice in the example above that we talked about bid prices and ask prices. These aren’t the same:

» The bid price is what you pay when you’re buying currency

» The ask price is what you get when you’re selling – and is less than the bid price

The difference between the two is known as the spread. This is where we make our profit. In the first example above, the spread is 0.0002 or two points, and so our profit is about $30 on $200,000.

Managing your risk

In the examples above, the dollar moved in the direction you expected. However, it could move in the opposite direction, and you could lose money. There are a number of things you can do to manage this risk:

» Change the default 1:100 margin for your account – 1:10 for low risk or 1:500 for high risk

» Manage your money by spreading it over several investments

Use a number of otherrisk management methods

How to choose forex broker?

How to choose forex broker?

Forex brokers:

» Supply their clients with a forex trading platform

» Provide real-time market quotes

» Execute buy and sell orders

» Allow their clients to trade on margin

» Carry out market analysis and provide recommendations

» Ensure their clients’ security and anonymity

Unless you’re a major financial institution trading directly in the forex market, you need a broker. How do you evaluate brokers and choose the right one for you?

Reviews

Forex broker reviews are published regularly in the media, and these are a good starting point. They will tell you what services the broker provides and how much they charge. For example, here are some of the services provided by Edeal , all of which are free:

» Industry-leading MetaTrader 4 forex trading platform

» Real-time quotes and order processing

» Trading bonuses up to 25% of the spread

» Dow Jones news feeds

» Daily market data, analysis and tips

» Forex training, seminars and consultation

» Online tutorials and guides

» Analysis of your trading performance

» Android and iPhone applications

» Free deposits and withdrawals

» Fast withdrawal processing

» Partner rebates from 50% to 65%

» 24×5 customer support

Selection criteria

Aside from services and cost, there are a number of other factors you should consider. Your broker must meet the following criteria:

» Have a license

» Execute orders quickly and accurately

» Know the forex market inside-out

Why Edeal ?

We believe in building long-term relationships with our clients. We’re committed to your success and embrace the following values:

» Honesty – we always act in your best interests

» Partnership – we provide the tools and information you need to succeed

We encourage you to compare. When you’re finished, open a Cent Account or Classic Account.

Forex strategies

Forex strategies

Each beginner on the international currency market approaches their operations with utter seriousness. The very first day poses a very justified question: what is the way to play in order to at least avoid loss in the long term? Forex trading strategies will help.

Forex strategies: programmes for functioning on the market

By applying a specific algorithm applicable to a specific market situation, the Forex strategy determines a trader’s action on the market. On the internet, you will find a number of various Forex strategies invented by traders that will guarantee profit given a specific market state. Successful traders have their own Forex strategies which they will obviously never share with the public because this is their own income mechanism, honed over the course of months if not years.

Newbies and Forex strategies: is success guaranteed?

There is another obvious fact as well: not even the most loss-proof play methodology will bring a new user millions straight away. The market always changes, and newcomers simply cannot adjust to the new situation here in time. Forex strategies are based on success and failure, on chasing profits along a road that is known for its pitfalls.

What Forex strategies to use

There are a number of universal Forex trading strategies that allow you to stay afloat for a long time without going in the red. Overall, using some Forex strategy on the market is required, because random bets will not bring a positive result. This has been proven time and time again. Of course, sometimes this may turn into a very successful deal or two, but stable profit becomes impossibility over time.

The experience of professional traders shows that a personal Forex trading strategy is the most efficient and comfortable solution for a trader. You will no doubt agree that an active, risk-taking person and their more cautious, risk-aware colleague who scrutinises the situation before making a move are unlikely to use the same methods. Only by trying out new things will you be able to select a path that suits you the most. You will see that rules that clash with your own values are hard to follow.

Forex dictionary

A

Arbitrage – Profiting from differences in the price of a single asset (such as a currency pair) that is traded on more than one market. For arbitrage opportunities to exist, the currency pair must be traded simultaneously on two different markets, and at different prices. One very common form of arbitrage is hedging, which is a practice of buying a security on one market (e.g. the spot Forex market) and selling the options on that currency pair in another market (e.g. currency options market). Arbitrage is also used in sports, in trading exchange traded funds and also in trading credit default swaps.

At-Or-Better – This term is used in reference to order placement, indicating that the broker should fill the trader’s order at the trader’s ordered price, or at a price that will be cheaper for the trader in terms of spread costs. Usually pending orders are used for such requests by traders to brokers.

At Limit – An order by a trader to a broker to fill a long trade at a price that is below the current market price, or to fill a short trade at a price that is above market price. The expectation is that prices will move against the trader’s expectation for the asset before turning in the direction of the trader’s expectation, and so an ‘at limit’ order reduces the level of draw down the account would have experienced if the order is filled at market price. An ‘at limit’ order is a pending order.

At Best – An order by a trader or broker to fill a trade using the best prices possible in the shortest time possible. An ‘at best’ order is invariably an instant order that will be filled at market price, and may be subject to slippage.

Asset – An item having commercial or exchange value. The commercial value of a resource is not fixed, but changes from time to time as a result of several factors influencing the supply and demand of the resource. It is this change in the perceived value of the resource that confers on it economic and commercial importance. Financial markets provide a standardized template on which assets can be exchanged for a value bestowed on it by the concurrence of traders and the intermediaries (brokers) in such transactions.

Ask – The price at which a currency pair or security is offered for sale. The Ask is the quoted price at which an investor or trader can buy a currency pair, or the price at which a dealer will sell a currency pair to a trader. This is also known as the “offer”, “ask price”, and “ask rate”. In a price quote, there are two prices that are listed, and it is the price listed on the right hand side of a price quote that constitutes the Ask. The Ask Price is always higher than the bid price. E.g. in a quote that is listed as 1.2346/1.2349, 1.2349 is the Ask Price.

Aggregate Risk – This is a measure of an investor’s total market exposure to spot and futures market contracts. Such investors would include banks, major corporations, hedge funds and other financial institutions. The definition for the Forex market is the exposure of a trading entity to fluctuations in the exchange rates of two currencies. Aggregate risk is a key indicator that a trading entity must employ in order to gauge the maximum allowable exposure to a a trade before engaging in that trade. Once this has been derived, limits on the position can be set. Larger corporations such as the ‘too big to fail’ banks have larger aggregate risk limits than smaller firms with lower credit ratings.

Aggressor – The aggressor is usually the party that initiates the deal in a transaction. In the financial markets, the aggressors are usually the ones responsible for order flows in a particular direction. This role is taken on by the institutional investors in the Forex market, and that is why in times of increased volatility (especially during news trades), it is not unusual to see large spikes following the release of a news item. In this instance, the institutional investors aggressive push prices by their large demand and hope to gain on this price change by offloading the positions on the non-aggressive section of the market.

Absolute Rate – Absolute rate is a combination of a percentage of an interest rate swap that is fixed, as well as the percentage that is flexible or floating. Interest rate swaps are used by companies to hedge against sudden and undesirable fluctuations in interest rates. So if the swap deal is given at a premium of 5% and a flexible rate of 2% from a flexible rate such as LIBOR or EURIBOR is added to the mix, this gives an absolute rate of 7%.

B

Base Currency – In terms of foreign exchange trading, currencies are quoted in pairs. This is because you cannot trade one currency on its own. A currency is always traded in exchange for another. The first currency in the pair is the base currency. The base currency is the currency against which exchange rates are generally quoted in a currency pair. In expressing the exchange rate, the rate is quoted as the value of the other currency in relation to 1 unit of the basic currency. For instance, when a quote of EUR/USD is said to be 1.3109, it means that 1.3109 US Dollars can be used to purchase 1 unit of the base currency. Examples: USD/JPY, the US Dollar is the base currency; EUR/USD, the EURO is the base currency.

Buy – An opening of a long and a closure of a short positions. Traders generally buy when there is the expectation that the price of the asset or that the exchange rate of the currency pair will increase. A Buy order in Forex is an instant market order to purchase the asset at the market (current) price.

Bull – A market participant counting on an increase in the value of the market in general or an asset specifically. A bull is also a market operator, a trader or an investor who speculates for a rise in prices of tradable instruments. The bulls will therefore buy an asset based on their sentiment or on their market expectations. When there are more bulls in the market place than there are sellers (bears), then the market price of the asset will appreciate.

Broker – An agent, who executes orders to buy and sell currencies and related instruments either for a commission or on a spread. Brokers are agents working on commission and not principals or agents acting on their own account. In the foreign exchange market brokers tend to act as intermediaries between banks bringing buyers and sellers together for a commission paid by the initiator or by both parties. There are four or five major global brokers operating through subsidiaries affiliates and partners in many countries.

Breakout – A breakout is a situation when the momentum of the price action is so strong that it moves beyond key levels of support (downside breakout) and resistance (upside breakout). Breakouts usually occur as a result of high impact news releases or some other factors that cause traders in the market to generally place orders in one direction.

Bid – The price at which a dealer is prepared to purchase a currency from an investor or trader, or the price at which an investor or trader can sell a currency pair to a dealer. This is also known as the “bid price” and “bid rate”. In a price quote, there are two prices that are listed, and it is the price listed on the left hand side of a price quote that constitutes the Bid. The Bid Price is always lower than the ask price. E.g. in a quote that is listed as 1.2346/1.2349, 1.2346 is the Bid Price.

Bear – A market participant counting on the market price decrease; a market operator, a trader or an investor who speculates on the fall in value of an asset. The bears will therefore sell an asset based on their sentiment of market expectations. When there are more bears in the market place than there are buyers (bulls), then the market price of the asset will depreciate.

Basis Point – A basis point is one-hundredth of a percentage point, or 1/100 (0.01%). This term has its origins in the practice of trading the ‘basis’, or the percentage difference between spreads. It is commonly used in describing the rate of change of interest rates. So if a central bank increases interest rate from 4.5% to 5%, this is an increase in 0.5% or 50 basis points.

Bank Rate – The rate at which a central bank is prepared to lend money to its domestic banking system. It is also known as the discount rate, or interest rate on the economic news calendar. Central banks function as a lender of last resort. Commercial banks invest funds deposited with them by customers either in the form of loans given out to individuals and businesses, or in other investment vehicles, but are required to keep reserve funds to handle settlement of transactions. Occasionally, commercial banks may run out of such reserve funds. They can therefore obtain stop-gap loans from the central bank, repayable at a certain interest rate. This is what is known as the bank rate.

Balance – The financial result of all completed transactions of a trading account. In the Forex market, there is an unused balance and the used balance (which is the margin put up as the trader’s equity in the leveraged trade). The true balance of the trading account can only be known when all unrealized profits or losses, as well as the initial margin (used balance) are included into the unused balance after all positions have been closed.

C

Cent Lot – A cent lot is equivalent to 1/1000 micro lots, where the value of one tick movement of price is equivalent to 1 cent.

Currency Pair – The most important thing you have to know about Forex is that there is no single currency to trade for in Forex. You will see that they are in pairs with each other. Like EUR/USD where EUR is the European Euro and the USD stands for United States Dollars. One of these currencies is called the ‘Base currency’ which is the second one in the pair we mentioned earlier (EUR/USD) and the other which is the first one is called the ‘Quote currency’. When
you are trading (buy or sell) a currency pair, you are trading the quote currency with the base currency of that pair.

Currency – Money issued by a government. Currency has evolved over centuries from grains to other times that were considered stores of value, to gold and silver, and then graduated to the use of minted coins and paper money. It is a form of money used as a unit of exchange within a country. Money is known as currency because once the issuing agency (the central bank) has decided on the amount of money that is in circulation at any given time, the existing amount of money in a system flows from one person to another based on the exchange of goods or services for it, and this is likened to a river current that flows from one point to the other.

Cross Rate – Currency exchange rate quotes which do not involve the US Dollar. In other words, the cross rate is the exchange rate between two cross currencies. Another definition has it as the quoted exchange rate of two currencies in a country in which neither currency is the official currency.

Counterpart – A participant in a financial transaction. A counterparty is a market participant that takes the opposing side of a transaction to that of a trader in the market. In the Forex market, market makers usually function as a counterparty in a Forex transaction.

Consolidation – This refers to a period of time in the market when prices are restricted to a tight trading range. Consolidation occurs when the majority of traders sit on the sidelines, leading to very low trading volumes.

Commodities – These are trad-able financial instruments whose contracts are based on materials of value that are either extracted from the ground (hard commodities such as gold, natural gas, oil), or are based on agricultural products (corn, coffee, cocoa, wheat).

Commission – Broker’s bonus for facilitating transactions. A commission is different from the spread, which is usually the difference between the price that a broker is ready to pay for an asset and the price that the broker is ready to buy back the asset from a trader. A commission is a fee charged for enabling a transaction to occur. In the Forex market, commissions are only charged in an ECN environment to cover the cost of maintaining the FIX protocol on which the electronic communication network works.

Centralized Market – A centralized exchange where all orders in the market are routed to, with no other competing exchanges receiving any orders/quotes. As such, all price quotes obtained from that exchange are the same that are given to all participants in that market.

Central Bank – A bank, administered by a national government, which regulates the behavior of financial institutions within its borders and carries out monetary policy. A central bank is responsible for issuing a nation’s currency, controlling its supply and in some cases, acting as a lender of last resort to provide emergency financing to the nation’s banking system.

Chart The Indexes – It is helpful for a trader to chart the important indexes for each market on a longer time frame. This exercise can help a trader to determine relationships between markets and whether a movement in one market is inverse or in concert with the other. For example, in 2009, gold was being driven to record highs. Was this move in response to
the perception that paper money was decreasing in value so rapidly that there was a need to return to the hard metal or was this the result of cheap dollars fueling a commodities boom? The answer is that it could be both, market movements driven by speculation.

D

Devaluation – The depreciation of the national currency, or in other words, the rate decline in relation to foreign currencies and gold. For example, in Britain in September 1992 raising interest rates in the situation of stagnation in the economy were the reason for the devaluation of the pound. On September 16 the pound lost 2.7% against the Mark and by the evening was traded in New York at 2.703.

Direct Quote – This is a quote that expresses the exchange rate in terms of how much of the domestic currency or the currency under reference can purchase one unit of another currency. So instead of the conventional quote for Euro vs US Dollar being expressed in terms of the base currency (EURUSD = 0.9860), the direct quote is expressed in terms of the counter currency to the base currency.

Depth of Market – This is a measure of the size and number of the open positions on the buy and sell side for an asset at various prices. This information is a measure of market liquidity and is also the basis of the data shown in the order book, accessible to traders using Level II trading platforms. Another definition describes depth of market as the number of units of the asset that can be purchased without significantly affecting the price of the asset. In other words, a very large order has to be made before the price of the asset shifts significantly.

Dealing Desk – This is the department in a market maker brokerage firm that is responsible for the execution of trade orders in the Forex market. Dealing desks act as intermediaries between the trader and the liquidity providers, matching buyers with sellers and fuilling sell orders with buy orders. Dealing desks can also be found in banks and finance houses.

Day Trading – Refers to a style or type of trading where trade positions are opened and closed during the same day. Day trading requires that the trader analyze the market using short term charts (e.g. the 1 minute, 5 minute, 15 minute and 1 hour charts), identify currency pairs that have the potential for moving between 10 and 100 pips, and then executing the trade using this pip range as the target and stop prices. A popular day trading technique is trading the price spike that follows high market impact news releases, in which the trader aims to capture market movement resulting from the price spike following the news release.

Diversification – The acquisition of a wide range of securities in order to reduce risks: the drop of rate of certain securities is covered by the growth of price of others. The history of the Kimberly Clark company is one of successful diversification. The company worked in a pulp and paper industry sector. At one point, company managers realized that it became difficult for the company to develop in this sector on the world scale. The major incentive was to find a new market, a new industry, and a new strategy. And Kimberly Clark developed Procter & Gamble company in the sector of paper consumer goods. They began to produce “Haggies” diapers, cosmetics and by now they have successfully realized their goal.

E

EA (Expert Advisor) – An expert advisor or Forex robot is a software whose algorithm is based on a trading strategy, and which is programmed to open and close trades in the market automatically based on the trading strategy it has been programmed to work on.

ECN Broker – An ECN broker is a broker that provides straight through processing for pricing and order executions to its clients without the intervention of a dealing desk. ECN brokers obtain pricing straight from the liquidity providers and offer the pricing to traders without interference or mark-up. ECN brokers therefore offer the most transparent pricing model in the market.

Economic Exposure – The risk that a company’’s finances is exposed to as a result of fluctuations in interest rates and exchange rates, especially when a component of the company’s operations has to deal with foreign exchange transactions or cross-border transactions. Usually, such a company that has economic exposure is one that has to regularly exchange the local currency for a foreign one, or borrow money from external financing institutions. In each case, there is a risk of economic exposure because of the floating nature of interest rates and exchange rates, so the entity stands to lose money by simple exchanges of money if the local currency weakens against the foreign one.

Equity – The balance of funds on the trade account. It is calculated using the following formula: balance + floating profit – floating loss.In other words, the equity in an account is calculated by adding the unused balance in the account to the difference between any floating profits made and floating losses in active trades.

European Monetary System (EMS) – EU countries relation in currency sphere, which has a goal to provide a stable national currencies rates ratio. Another goal is the facilitation of stabilization of foreign economic relations in general.

Exotic Currency – An exotic currency is one that is thinly traded and as such, has little liquidity and very wide spreads. Examples are the Swedish Krona (SEK), Norwegian Krone (NOK), Turkish Lira. On the forex platforms, the pairings of these currencies usually have very wide spreads. E.g. the EURSEK has spreads of up to 50 pips on some platforms. As a consequence, they also have wide intraday ranges. Examples of exotic currency pairings include EURSEK, EURNOK, USDZAR etc.

F

Fakeout – A fakeout is a situation where a trader takes a position in the market on the basis of analysis done with technical indicators, but the outcome of the trade is different because the asset so analyzed takes a different course from the technical analysis done on it. Fakeouts occur commonly when a trader uses a single indicator for conducting technical analysis.

Fill – The process of completing a customer’s order to buy or sell a currency pair. In an ECN environment, the trader’s fill is usually at the price that he has ordered at from a liquidity provider. In a dealing desk environment, the trader’s fill may not necessarily be at the price at which he ordered, especially in a situation of market volatility.

Five Digit Pricing – A system where currency pairs are priced with 5 decimal places instead of the conventional four. E.g. quote for EURUSD with five digit pricing would be expressed as 1.31092. This is a more exact pricing model for the forex market and is commonly used by ECN brokers.

Fixed Spread – This is a situation where the difference between the bid and ask prices is always the same, irrespective of market demand or volatility. Fixed spreads are a feature of dealing desk trading in the forex market.

Flat – The Flat is a term that has three meanings. In Forex, it indicates a state of being neither in a long position or short position, or in other words, describing a trading book with no market exposure. It can also mean a bond that has no interest accruing to it, or a state where the price is neither rising nor falling (flat market).

Floating Profit and Loss – Unrecorded gains/losses on the open positions of a certain tool at current rates values. Another name for floating profit or loss is unrealized profit or loss. When a position is open, whatever profit or loss is shown on the active trade is known as the floating profit or loss. In so far as the positions are open, whatever profit or loss shown on the platform represents the floating profit/loss.

Foreign Exchange – The purchase or sale of a currency against sale or purchase of another. This is also used to describe the market in which currencies re bought and sold against each other with the aim of profiting from the change in the exchange rates between one currency and another. In everyday street parlance, it’s used to connote foreign currency.

Fundamental Analysis –Other traders use fundamental analysis for their trading strategy. They follow the effect of economic, social and political events on currency prices. Reading specialized Forex news can help keep you in touch with the Forex community to find out how events might affect the currency prices.

Four Digit Pricing – A system of setting prices of currency pairs with 4 decimal places. E.g. quote for EURUSD with four digit pricing would be expressed as 1.3109. This pricing system is mostly used by market makers.

G

Gap – A price range where quotes haven’t occurred. A gap usually occurs as a result of after-hours trading, which pushes the price of an asset to some distance away from the original market close, thereby creating an area where no price quotes occur. Gaps occur when there is plenty of volatility, and when some market moving news such as an earnings report has been released to the market after trading hours.

Good Till Cancelled Order (GTC) – A buy or sell order which remains open until it is filled or cancelled. A good till cancelled order is used by a trader when he/she feels that the conditions under which the asset is trading is one where an order which is filled will bring favorable returns for the trader, irrespective of how long it takes.

H

Hard Currency – A currency that is used and has wide acceptance internationally as a result of the stability of the country of its origin and the respect and standing that the country has in matters of international trade. As a result, these currencies are widely traded because of the global demand and this translates into great liquidity for that currency. An example is the US Dollar which is used for settlement of most international transactions. The value of hard currencies does not experience wild swings in fluctuation.

Hedge – A transaction that reduces the risk on an existing investment position. A hedge is a transaction which is used to cover for any losses that may be incurred on another investment. An example of a hedge is using a Short option on the currency futures market to cover for a long position on the spot Forex market. The way the hedge is constructed is such that if the investment that is being hedged is successful, the losses from the hedging position will be far less than the profits from the hedged trade, and if the hedged trade ends in a loss, the hedge trade’s profits will outstrip the losses from the hedged trade.

Hedging – An insurance operation against adverse market changes through a counter-purchases or sales of assets. This is the active use of an opposing position in another market to cover for any losses that may be incurred from an investment in a certain market.

Hedged Margin – A hedged margin means holding an equal volume of trade on the buy and sell side of an active position simultaneously. This means that if a trader holds 0.5 lots on a long order on EURUSD and also holds 0.5 lots on a short order on EURUSD, the net gain/loss is neutralized until the trader closes one of the positions. This works well as a hedging strategy on well funded accounts. It is used when the trader is suddenly unsure of the outcome of a trade and has no time to utilize a proper hedge on another market.

I

Indirect Quote – This is a system of currency price quotation where the quote is expressed in terms of how many units of a foreign currency will be used to purchase a unit of the local currency. In other words, the indirect quote will depend on the country is used as the reference point. If the trader is in Canada and wants to express the USD/CAD currency quote in an indirect manner, that quote will be expressed as units of USD required to buy 1 CAD e.g. 1.0078 USD = 1 CAD

Initial Margin – The deposit a customer needs to make before being allocated a trading limit. It can also be described as the initial capital that a broker mandates a trader to have in his account to be used as collateral for every leveraged trade opened in the market. The requirements for initial margin differ from broker to broker and from country to country. In the US, FINRA requires traders to have an initial margin of 25% of the amount obtained from the broker as a leverage for the trade.

Instant Execution – The provision of quotes to the trade system without a request. An instant execution is an instruction to the broker to fill a client’s order at market price. It is used when the trader wants to get into a position immediately so as to profit from that position.

Interbank Market – This is a financial market that features strictly bank to bank trading of currencies, money market and other financial instruments. In other words, this is the banks’ market. No other class of investor can trade here. An example of an interbank market is the interbank currency auction where central banks sell foreign exchange to commercial banks, who now provide same for customers who need them.

Interest Rate Carry – The income or cost associated with keeping a foreign exchange position overnight. This is derived when the currency pairs in the position have different interest rates for the same period of time. The interest rate carry is the basis of the carry trade, where traders look for currency pairs that feature a high interest rate yielding currency and another with a lower interest rate.

K

Know the Risk – Trading foreign exchange on margin carries a high level of risk, and may not be suitable for everyone. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite.

L

Leverage – If your forex broker offers you a leverage of 1:100 you can trade with a 100 times more money than you have in your deposit. This means that if you want to buy 100000 EUR/USD, you only need to have 1000 actual euros. With this kind of leverage you can take a position that is a 100 times larger in value and expect a 100 times bigger profits or losses, therefore great care is advisable when placing your trade. Equities, on the other hand, are
traded without leverage.

Limit and Stop Levels – These are the price levels at which a trader has set a take profit target and stop loss for his forex trades respectively. Some trading platforms require the trader to set the profit and stop loss targets using a Limit and Stop order, and the price levels that are chosen for these targets are known as limit and stop levels.

Limit Order – An order to execute a transaction at a specified price (the limit) or better. A limit order to buy would be at the limit or lower, and a limit order to sell would be at the limit or higher. This order type is used when the trader expects the market to retreat before advancing (for Buy Limit) or to advance before retreating (for Sell Limit). Another way of using the limit order in an open trade is to set a profit target so that once the trade reaches the Limit target, the trade is automatically closed in profit.

Liquid Market – This is a market in which there is a large number of buyers and sellers, such that trade volumes are high and it is not difficult to get matching order quotes filled because there is always a ready buyer or seller to match any order type. Orders in a liquid market are fuilled instantly because there are always buyers to buy sell orders and sellers to match buy orders.

Liquidity – Refers to the relationship between transaction size and price movements. For example, a market is “liquid” if large transactions can occur with only minimal price changes. The Forex market is described as being very liquid because transactions that are carried out in this market are in the region of hundreds of thousands to millions and billions of dollars. Where traders can only afford hundreds to thousands of dollars, market makers step in to acquire positions from the liquidity providers so as to bridge the liquidity gap, and these positions are resold to such traders in smaller chunks.

Lock In Profits – This is a system of using a trailing stop order (i.e. a stop loss set to a few pips below {for long orders} or above {for short orders} for an active forex trade with unrealized profits such that the trailing stop follows the market price by the set number of pips if the trade moves in the trader’s favor, and locks the profit by staying stationary when the trade moves against the trader.

Locked Positions – Buy and sell positions on the same asset with the same trading volume. Locking of positions is an emergency hedging action taken to prevent further increase of a floating loss in a trade that has moved adversely to a trader’s position. If a trade in one direction is going bad ans there is a likelihood it may continue for some time, the trader may decide to place another trade in the opposite direction to curtail further losses and buy time to evaluate the positions.

Long Position – Open position to buy an asset, with the expectation of profiting from advancing prices. In Forex, a long position involves buying the base currency and simultaneously selling equivalent units of a counter currency.

Loss – A loss is a situation where the price of a currency pair moves against the direction of the trader’s position such that when the trade is closed, the trader ends up with less account equity than when he started the trade. For instance, if a trader goes long on the EURUSD at 1.2908 and sets a profit target of 1.2958 and stop loss of 1.2868, and the currency retreats to hit the stop loss at 1.2868, then the trader has experienced a loss on the trade.

Lot – When you buy or sell a trade you are dealing with a certain amount. In Forex that amount is defined as lots. A lot is the 100,000 units of a currency pair which might be too big for a novice trader. That’s why there are smaller lots too for people with the different amount of investment.
A ‘Lot’ is the highest one and the others are the Mini lot, Micro lot and Nano lot. Mini lot of 10,000 units, Micro is the unit of 1000 units and the Nano one is the 100 units of currency. It is the indicator that defines the amount you are buying and selling when you are trading.

M

Margin – The guarantee, which is required by the dealer from the trader, to maintain an open locked position or locked position that the client intends to open. Each tool, asset or market has its own margin requirements. The margin is the collateral on a leveraged trade.

Margin Call – A call for additional funds in a margin account either because the value of equity in the account has fallen below a required minimum (also termed a maintenance call) or because additional currencies have been purchased (or sold short). Usually, a trader is required to have an initial margin as collateral for a leveraged trade. When the trade incurs a floating loss, this is deducted from the trader’s margin and not from the leveraged funds. When the loss is about to wipe out the trader’s equity, the broker will issue a margin call, asking the trader to add more funds or risk the trade being closed out automatically to preserve the leveraged funds.

Margin Call Level – This is the price level that an asset will get to before the broker issues an instruction to the trader to add more funds to his account or risk closure of all open positions. Before signing up for a leveraged trading account such as is obtainable in the forex market, the trader has to agree that a particular price level will be used in the calculation of when a position is closed to protect the broker’s equity in a bad trade. This is the margin call level.

Market Depth – This is the size of an order that is required to move the markets by a certain degree, or to change the price of an asset by a certain degree. An increased market depth means that there is a lot of liquidity in the market, while reduced market depth means that assets are illiquid. A market with increased market depth makes it easier to get pricing with lower spreads and more instant order fuillment.

Market Maker – A person or firm that provides liquidity by making two-sided prices (bids and offers) in the market. In Forex, transactions require large volumes to avoid large swings in prices, and this requires traders to trade with volumes of at least several hundreds of thousands of dollars to millions of dollars. Due to the fact that many traders cannot afford these sums, market makers step in to buy off assets and hold both buy and sell positions on the assets, which are then offered in smaller chunks to retail traders to buy in tens of thousands of dollars per transaction.

Market Order – An order made by client for an immediate purchase or sale of a security at the price of the market. This can also be described as an order/instruction by the trader to the broker to fill an order immediately at the present price of that asset in the market.

Market Price – This is the price that currently exists for an asset in the market. For instance, if the price of a currency pair is quoted at 1.2890/1.2893 in real time, then the that is the market price of the asset.

Market Rate – The current quote of a currency pair. This is the rate at which a currency can be used to exchange for another currency in real time, and is the rate at which a trader who uses a market order for the security will be filled at.

Minimum Lot – This is the minimum allowable trade size/volume that a trader can use for a forex trade on his broker’s forex trading platform. Some brokers allow a minimum lot of 0.1 lots while some others allow 0.001 lots (1 micro-lot).

Minimum Step – This is the minimum degree of change in the trade volume of an asset that a trader can purchase. For instance, a Standard Lot account with a minimum lot size of 1 lot and a minimum step of 0.1 lots allows the trader to purchase 1.1, 1.2, 1.3, 1.4 lots of the asset, all with an increment or decrement of 0.1 lots (which is the minimum step).

N

NASDAQ Index – An after-market, wholly electronic index specialized on shares of leading technology companies. Created as a successor to the Over-the-Counter (OTC) market in 1971, the NASDAQ index is plotted as the average weighted shares market price. Trading in NASDAQ securities is done electronically using online trading exchanges, which is different from the way the NYSE securities are traded (auctioning on the trading floor). It is traded as a stock index asset. Despite being known for its technology stocks, other sectors such as pharmaceuticals are also listed on the NASDAQ index.

Necessary Margin – The guarantee (in monetary expression), which is required by the dealer to maintain an open position. In leveraged markets, the trader is required to maintain a margin in order to sustain trades that are open against losses. It is the necessary margin that a broker looks at before issuing a margin call and closing positions as a result. If the trader has enough of the necessary margin in his account to maintain a position, a margin call will not be issued and active positions would not be closed.

No Dealing Desk – The process of delivering prices from the liquidity providers to traders without a department in the broker’s office acting as trade or pricing intermediary. ECN brokers operate a ‘no dealing desk’ environment.

Non-trading Operation – The following types of operations performed on a trading account constitute non-trading operations: deposit, withdrawal, repayment and extension of credit. These are all transactions that are performed on a Forex trading account by a trader aside from trading.

O

Order – A client’s order to buy or sell a certain amount at a given rate. There are several types of orders, and these can all be compressed into two main order types: market orders and pending orders. Market Buy and Market Sell are the instant (market) orders, while Order Cancels the Other (OCO), Buy Stop, Sell Stop, Buy Limit, Sell Limit, Entry Limit/Stop, Good till Day (GTD) and Good Till Cancelled (GTC) are all pending order types.

Overnight – An open position which is transferred to the next day. Sometimes positions are left overnight in an attempt to earn money from the interest rate differential on a long position on the higher-yielding currency. Swing traders and position traders who leave positions open for days and weeks at a time, leave positions overnight by virtue of their trading styles. Intraday traders do not leave positions open overnight.

Oversold – A technical analytical term which describes a situation where the value of a currency pair has dropped so low that the price of that asset is expected to undergo a market correction upwards. If traders perceive an asset as oversold, sellers will thin out and buyers will come in, sending the price of the asset upwards.

Open Market – The term ‘open market’ is used to describe a market which is open to all participants and where traders can participate in buying and selling of securities without restrictions. This also refers to a deregulated market. Prior to 1997, the Forex market was not an open market, but after deregulation of the market that year, individual traders were allowed to come into the market place, making the Forex market an open market.

Open Position – Any position (long or short) that is subject to market fluctuations and has not been closed out by a corresponding opposite transaction. On Forex platforms, there is a tab that displays all open positions. This information is important especially if the trader has several of such positions open, so that they can all be tracked, and the trader can also use the information to check his market exposure to avoid excessive risk.

P

Pending Order – A client’s order to open a position when a price reaches a certain level. A trader may decide to use a pending order if the current market prices are deemed unfavorable for profiting from, but are expected to get to price levels where the odds of profitability are improved. Pending orders are also used when the trader expects prices to retrace to cheaper levels before resuming the previous trend, or when the trader is waiting for confirmation of a break of a key level before entering in the direction of breakout.

Pip – Pip is the magical thing that turns your investment into profit through trading. If you ever looked into a trading platform, you would have seen two numbers look almost. They are the buying price and the selling price for that currency pair. You should know how the buying and selling of a currency pair works. Pip is the 4th decimal number of that price; when a currency pair has YEN (Japanese Yen) in it, the pip is the 2nd decimal number for the currency price. When you are opening a trade and closing it after some time, a significant amount of pip will change for sure. That multiplied by the amount you are buying or selling defines your profit or loss from that trade.

Practice makes Perfect – Every trader makes mistakes, so it is a good idea to familiarize yourself with a trading environment before you invest your money. To improve your trading skills, try opening a free demo trading account with us.

Point – The word ‘point’ can be used in different ways in the financial markets. It could be used to mean the minimal price change in an asset or currency pair. E.g. initial price of the security was 1.3550 and it has dropped to 1.3545. It means that there was a 5-point rate change. A point can also be used to refer to ‘basis point’, which is one-hundredth of a percentage point or 1/10000. It is a term popularly used to describe the changes in the interest rate in one year for a currency. Point can also be used to refer to percentage point, which is the arithmetical difference between two percentages.

Price – The price at which the underlying currency can be bought or sold. Usually, pricing can be provided by market makers to the trader (indirectly), or from the liquidity providers (banks) directly in a non-dealing desk environment. Pricing of currencies can be either driven by market demand, or by government intervention.

Profit – Customer’s revenue from a completed transaction. In terms of profit, the trader can consider his revenue from the trade, or revenue over a time period from a succession of trades. For a single trade, a profit is made when the price of the asset moves in the direction of expectation of the trader’s position. So for a long trade, the trader makes a profit when the price of the asset moves higher, and for a short trade, when the price of the asset is lower. When profitability is viewed over a time period, then the trader has to make more from his winning trades than he has lost from his losing trades for the time period in view for a profit to have been made.

Q

Quote – A security price considered while buying and selling. It is expressed in Ask and Bid prices, and the quoted prices are always that of the counter currency (quote currency) to one unit of the base currency. A price quote is made up of the highest price that the trader is willing to pay for the asset as well as the lowest price that the dealer is willing to accept for the asset. A typical quote for the EURUSD is 1.2940/1.2943, where the first price is the Bid price and the second price is the Ask price. Both prices indicate how much of the counter currency (USD in this case) is used to buy 1 unit of the base currency (EUR in this case).

Quote’s Feed – Quotations on each security entering the system. It is more aptly defined as a high speed stream of data that transmits information about pricing in real time and without delays. The quotation level of the broker’s platform (Level I, II or III) will determine how fast the data stream gets to the end user.

Quote Currency – The second currency in a currency pair, for which a client is able to sell/buy a base currency. For instance, in the currency pair USD/JPY, Japanese yen is the quote currency. The quote currency is also called the counter currency, and gets its name because the exchange rate is usually stated as the price of the quote currency against one unit of the base currency. So in a rate quote that states that the USDJPY is 79.34, the figure ’79.34’ simply means that 79.34 Yen will be used to buy 1 US Dollar.

R

Rate – The price of one currency expressed in the unit price of another country’s currency. Usually, the rate is expressed as the price of a counter currency (the 2nd currency in a currency pair) as against one unit of the base currency (the currency on the left of a currency pair). So when we express the rate of EURUSD as 1.2940, we are saying that the rate at which a trader will sell one Euro for the USD is at 1.2940 US Dollars.

Requotes – This is a phenomenon that occurs when prices have moved between the time that they are displayed and the time the trader clicks on the order execution button on his platform. The trade is not executed; rather the trader is asked to either accept the new price for his order to be executed, or the order execution is cancelled if no action is taken in a matter of seconds.

Rolle-Over – The process of extending the settlement value date on an open position forward to the next valid value date. In Forex, a rollover can either attract an interest rate charge on the trader’s account, or pay the trader an interest rate charge, depending on the interest rate differential of the two currencies in the currency pair being traded, that has been rolled over to the next trading day.

Range – The difference between the maximum and minimum prices of a certain time period. The range is the distance between the highs made by the price of an asset and the lows made by the same asset within the same time frame. The range can then be used to make certain trading decisions such as where to apply profit targets and where to apply stops. The range can also tell a trader how much movement a currency pair has in any given time period. Identifying the range is also the basis of trading by range traders, who typically buy at the price lows and exit at the price highs, then sell at price highs and exit at price lows.

S

Scalping – This is the trade practice of opening and closing positions manually within a few minutes of each other in order to capture small market moves and gradually build these up over time to produce increased profits. Scalpers use larger position sizes in order to make more money from the smaller pip targets.

Sell Limit Order – An order to execute a transaction only at a specified price (the limit) or higher. The sell limit order is used when the trader has a bearish expectation for the asset, but expects the asset to rise higher up to the nearest resistance point before resuming the downward move. A sell limit is a pending order, and using a sell limit ensures that traders benefit from an asset which still has some upward momentum which is not expected to last long.

Selling Short – A situation where an asset has been sold with the intent of buying back the position at a lower price to make a profit. Another name for this is short selling. Selling short works by borrowing the asset from the dealer and selling this asset at a higher price, then waiting for the price of the asset to drop after which the trader buys it back at a lower price, returns the asset to the dealer and profits from the price difference.

Short Hedge – This is a loss-protection/hedging strategy where the trader uses a short on a futures or options contract in order to offset any losses incurred from a bearish movement of a commodity, stock or currency asset that the trader owns. So if a trader owns a stock and the stock price diminishes, he can use a short sale of the options contract on that asset in such a way that exercising the option will pay him more money than he would have lost on the stock trade.

Short Position – The situation when a currency sale has occurred and has to be covered with the respective buy. A short position is assumed by the trader on an asset when there is an expectation that prices will fall, and in the Forex market, this is executed by selling the base currency and simultaneously buying the counter currency, and then re-exchanging the currencies by buying the base currency at a lower price with the counter currency which now has a higher value.

Slippage – It’s the experience of not getting filled at (or even very close to…) your expected price when you place a market order or stop loss. This can happen because either: market price is simply moving too fast, the market is not liquid or you’re talking to an unmotivated broker. Slippage typically occurs in a very volatile market (such as when there is a systemic effect that causes the entire market, asset or currency to fall, creating a situation where there are no traders to purchase the position at a stop loss. Sometimes, it occurs because brokers fill the large trade orders of institutional traders first, and by the time they move to the smaller retail orders, the large demand on the asset created by the institutional orders has driven prices too far.

Spot Market – Market where people buy and sell actual financial instruments (currencies) for two-day delivery. The spot market is characterized by very short settlement times. The stock market and currencies market are spot markets. They are the opposite of futures markets in terms of settlement dates.

Spot Price – The current market price of a currency that normally settles in 2 business days (1 day for USD/CAD). Usually, the price at which the trade was closed is the spot price and this is the price at which the asset is settled in a time frame of T + 2 days, including the day of the ‘T’, the transaction.

Spread – If you take a look at the forex quotes on your trading platform you will see that there are two prices for each currency pair. One is the price at which you can buy, referred to as the ask price and the other is the price at which you can sell, referred to as the bid price. The difference between these two prices is known as the spread. The ask price is always higher than the bid price.

Stop Loss – A client’s order to close an open position if the trade has moved against the trader’s position up to a certain price level. It is used to minimize losses. On some trading platforms, this is set on one side of the OCO order, while on some other platforms a stop order is set on an active trade or a stop price is entered during the order process (MT4).

Stop Order – An order to buy or to sell a currency when the currency’s price reaches or passes a specified level. A stop order is used in two ways. On some Forex trading platforms, the stop order is used to set the stop loss on an active trade. Another way that the stop order is used is to take advantage of price breakouts. By setting a stop order beyond a key level (above the resistance for long trades and below the support for short trades), the trader can take advantage of a break of these key levels when if he is not sitting in front of his computer.

Stop Out Level – This is the price level at which the broker will automatically close all the trader’s positions as a result of the level of equity in the account dropping to critically low levels. If the margin level is lower than the stop out level, then the stop out will be executed at market price.

Stop-Limit Order – This is a stop order that indicates a price limit for the asset so that the limit so reached now becomes a limit order and not a market order.

Swap – The payment for transferring an open position overnight. May be both positive and negative. The night from Wednesday to Thursday triples the payment. The swap payment is based on the interest rate differential between the two currencies in a currency pair on which the trade position is rolled over to the next trading day. The swap is positive if the trader has a long position on the currency with the higher interest rate, and negative when the trader is short on the higher yielding currency (or long on the lower yielding currency).

T

Take Profit Order – A customer’s instructions to buy or sell a currency pair which, when executed, will result in the reduction in the size of the existing position and show a profit on said position. This order is used by the trader to automatically close the trade when the position has moved in the trader’s favor up to a certain level. This order is executed by filling a suitable price in the ‘Take Profit’ tab during order execution (MT4), or by using the Limit Order tab or using the other end of an OCO order.

Tick – A minimal change of security price. A tick may represent a movement of one pip on a four-digit pricing broker.

Technical Analysis – To develop a strategy, traders use a variety of tools and techniques. Some traders perform technical analysis by using currency charts to study the market. This technique assumes that past market movements will help predict future activity. The effectiveness of technical analysis makes it a very popular trading technique.

Trend – A direction of the market movement. If the asset/market is rising in price, the trend is up. If the market or asset is dropping in price, the trend is down. If the price of the asset is hedged in a tight range of prices for a considerable length of time, the trend is sideways/range-bound and the asset is said to be in consolidation.

Turnover – The total volume of all executed transactions in a given time period. It can also be defined as the aggregated cost of all trading deals within a specific time frame. The average daily turnover in the Forex market is about $4trillion.

U

Unrealized (Floating) Profit-Loss – An unrealized profit or loss is a situation where an active position in the market has moved into profit or loss territory, but the trade has not been closed so as to apply the profit or loss to the account equity.

Up Volume – This is the volume of an asset that has ended the day higher than it opened. So if an asset’s closing price is higher than its opening price for a trading day, all the trade volume on that asset is considered to be up volume.

Upside and Downside Ratio – This is the ratio of the volume of assets that ended he day higher to those that ended the day lower. The upside/downside ratio is commonly used in the New York Stock Exchange as an indicator of trends, with a higher ratio indicative of an uptrend.

Used Margin – This is the portion of the trader’s account equity that has been committed to a trade/trades in the forex market. Anytime the trader opens a position in the forex market, some money is taken from his account equity to act as collateral for the equity that is supplied by the broker for leveraging the trade. This is the used equity.

V

Variable Spread – Variable spreads are a feature of trading in an ECN environment and describe a situation where the difference between the bid and ask prices of a currency pair change according to the demand on the currency pair and the volatility.

Volatility – An indicator which characterizes the tendency of a market price change. Expressed in absolute values 5$ ± 5$ or in relative of the initial price 5$ ± 5%. Volatility is a measure of price variations in an asset over a period of time. An asset that experiences wide price variations in a short length of time is said to be volatile. Volatility can also be measured and traded as an asset. A popular volatility-based index is the Volatility Index (VIX).

Variation Margin – Funds, which are required to bring the equity in an account back up to the initial margin level, calculated on a day-to-day basis. When the trader’s initial margin required to keep a trade open falls below the maintenance margin, the broker will require the trader to fund the account back above the maintenance margin so that the trade stays open. This is what the variation margin is all about.

W

Wave – This is a short term movement of a currency pair which moves against the general trend of the market. This movement is expressed as a wave against the trend. This is usually produced by retracements which are areas where those who had entered the trend early enough have started taking profits.

Weak Currency – A currency that fluctuates in value very often, usually to the downside. It can also be used to describe a currency that trades at a low level against other currencies or a currency which requires large amounts of it to be exchanged for lower amounts of a foreign currency.

Win-Loss Ratio – This is the ratio of the number of winning trades versus the number of losing trades. The win/loss ratio does not take into account the amount that was won or lost on each trade, but only the total number of trades on both sides of the equation.

Economic indicators

Economic indicators

Macroeconomic performance characterises economic development, indicating economic growth or decline. Based on these measures, price shift trends may be predicted. Thus, it may be said with certainty that publishing of favourable data may lead to considerable and long-term shift in exchange rates. These performance indicators include Nonfarm Payrolls, GDP, Industrial Production, CPI, PPI and a number of other macroeconomic performance indicators.

The date and time of a specific indicator being published are known in advance. There are so-called calendars of economic indicators and major events in the functioning of some countries (noting specific dates or approximate release time). The market prepares for such events. There are expectations and forecasts on the value of a given indicator and its interpretation.

The release of data may lead to sharp exchange rate fluctuations. Depending on how market participants interpret a given indicator, an exchange rate may swing either way. This swing may either reinforce or adjust an existing trend, or even start a new one. A given outcome depends on several factors: the market situation, the economic situation of countries hosting the currencies, prior expectations and attitudes, and, finally, the value of a given indicator.

Tools

Platforms

Partners

Risk Warning: Trading on the Forex market involves substantial risks, including complete possible loss of funds and other losses and is not suitable for all members. Clients should make an independent judgment as to whether trading is appropriate for them in the light of their financial condition, investment experience, risk tolerance and other factors.

Disclaimer: Edeal Markets Limited is registered in St. Vincent & the Grenadine as an International Broker Company with the registration number.

The objects of the company are all subject matters not forbidden by International Business Companies (Amendment and Consolidation) Act, Chapter 149 of the Revised Laws of Saint Vincent and the Grenadines, 2009, in particular but not exclusively all commercial, financial, lending, borrowing, trading, service activities and the participation in other enterprises as well as to provide brokerage, training and managed account services in currencies, commodities and leveraged financial instruments.We are registered in Saint Vincent as an International Business Company (23711 IBC 2016) and regulated by the Financial Services Authority (FSA) and HK, Edeal Markets LTD ensuring a trustworthy relationship with our clients.

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From time to time, we may update this Privacy Statement. In the event we materially change this Privacy Policy, the revised Privacy Policy will promptly be posted to the websites and we will post a notice on our websites informing you of such changes. You agree to accept posting of a revised Privacy Statement electronically on the website as actual notice to you. Any dispute over our Privacy Statement is subject to this notice and our Customer Agreement. We encourage you to periodically check back and review this policy so that you will always know what information we collect, how we use it, and to whom we disclose it. If you have any questions that this statement does not address, please contact a Customer Services representative.

ANTI-MONEY LAUNDERING

Edeal Markets LTD is required to comply with the Anti-Money Laundering and Countering Financing of Terrorism Legislation (AML/CTF Laws). To help the government fight the funding of terrorism and money laundering activities, law requires all financial institutions to obtain, verify, and record information that identifies each person opening an account. Edeal Markets LTD has developed internal Anti-Money laundering and Counter-Terrorism Policy (hereinafter – AML Policy) based on the risk assessment, so the objectives of the AML/CFT Laws can be achieved. These are:

» To detect and deter money laundering and financing of terrorism.

» To maintain and enhance Edeal Markets LTD international reputation by adopting, where appropriate,recommendations issued by the Financial Action Task Force on Money Laundering.

» To contribute to public confidence in the financial system.

By applying for an account with Edeal Markets LTD you are taken to agree to the following terms:

» You warrant that you comply with all applicable anti-money laundering laws and regulations, including but not limited to the AML/CTF laws and associated rules and regulations (in force from time to time).

» You are not aware and have no reason to suspect that.

» The money used to fund your deposit in your account has been, or will be, derived from or related to any money laundering or other activities deemed illegal under applicable laws or regulations or otherwise prohibited under any international convention or agreement (“illegal activities”).

» The proceeds of your investment in the Fund will be used to finance illegal activities.

» You agree to promptly provide us with all information that we reasonably request in order to comply with all applicable laws and regulations relating to anti-money laundering.

According the AML Policy, Edeal Markets LTD will conduct initial and ongoing due diligence, depending on the level of risk posed by a particular customer.

For Retail Customers:

This minimum information may include:For Retail Customers:

» The customer's full name.

» The customer's date of birth (if natural person).

» The customer’s nationality (if natural person).

» If the person is not the customer, the person's relationship to the Customer.

» The customer's address or registered office.

» The customer's company identifier or registration number.

» The expected origin of the funds to be used within the relationship.

» Occupation and name of employee (if self-employed, the nature of the self-employment).

For Individuals:

Please contact support@edealfx.com to get more information regarding the verification procedure and documents requested from you.

For Corporate Customers:

a) Certificate of Incorporation or any national equivalent.

b) Memorandum and Articles of Association and statutory statement or any national equivalent.

c) Certificate of good standing or other proof of registered address of the company.

d) Resolution of the board of directors to open an account and confer authority on those who will operate it.

e) Сopies of powers of attorney or other authorities given by the directors in relation to the company.

f) Proof of identity of directors in case he/she will deal with Edeal Markets LTD on behalf of the Customer (according to the Individual identity verification rules described above).

g) Proof of identity of the beneficial owner(s) and/or the person(s) on whose instructions the signatories on the account are empowered to act (according to the Individual identity verification rules described above).

For Wholesale Customers:

What this means for you: In compliance with the Anti-Money Laundering and Countering Financing of Terrorism Act 2009, this minimum information may include:

» The customer's full name.

» If the person is not the customer, the person's relationship to the customer.

» The customer's current permanent address or registered office.

» The customer's company identifier or registration number.

» The expected origin of the funds to be used within the relationship and source of wealth.

In order to verify the above mentioned information Edeal Markets LTD will require at minimum submitting the documents specified above for corporate customers. Edeal Markets LTD may also request you to provide additional information accompanied with respective documents.